Telstra to fight ACCC price cuts in the Federal Court

Telstra has decided to fight in the Federal Court the competition watchdog's attempt to cut its wholesale prices – a move that could imperil price cuts and data allowance increases for millions of phone and internet customers at rival providers.

Telstra chief executive Andy Penn has taken the ACCC to court over attempts to slash its wholesale prices. Photo: Louise Kennerley

Telstra chief executive Andy Penn said at the time the decision could affect its infrastructure spending if allowed to stand.

Telstra has now lodged a claim in the Federal Court to have the ACCC's ruling overturned.

The issue affects the millions of Australians using broadband services at Telstra's competitors such as Optus, TPG and Dodo.

Court the place for clarity

"Telstra has today decided to file an appeal with the Federal Court seeking review of the ACCC's recent fixed-line pricing decision," a spokesman said in a statement.

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"In our view, the decision does not follow the ACCC's own fixed pricing principles that require Telstra to be given the opportunity to recover from wholesale customers the costs of providing services to them.

"We believe the court is the appropriate place for us to get clarity on this matter."

Telstra's main argument is that it must keep Australia's copper phone lines running while customers switch over to the national broadband network.

This will result in the telco getting less money to maintain its systems – an issue it wanted to fix by raising prices 7.2 per cent.

Telstra already compensated, say rivals

The ACCC and Telstra's rivals have argued it has been compensated through the $11.2 billion deal signed with NBN to hand over its networks.

ACCC chairman Rod Sims told Fairfax Media the regulator had always known that going to court was a possibility and stood ready to defend its decision.

"We're conformable with Telstra seeking judicial review as is their right," he said. "Our decision on wholesale access prices, however, did apply to the fixed principles for the declared fixed-line services and it did take into account the unique circumstances of the transition from Telstra's copper network to the NBN.

"These things are always a possibility and it's their right to do this."

The ACCC's decision started from from November 1 and cut Telstra's earnings before interest, taxation, depreciation and amortisation (EBITDA) by $80 million in the eight months left in financial year 2016. However, this could be reversed if Telstra wins the looming court battle.